What’s going on in Phoneland?

Connecting the dots on some news stories from Phoneland.
First, the CEO of Ericsson has been sacked:

Kim McLaughlin, Ericsson Ousts Vestberg as CEO After Turnaround Plans Stall
Vestberg’s departure caps a turbulent period for Ericsson, which is cutting jobs while battling fierce competition from from Huawei Technologies Co. and Nokia Oyj. The company said last week it would accelerate cost cuts after reporting four straight quarters disappointing revenue and profit. Vestberg has faced questions on probes into alleged corruption in Asia and Europe, and last week the company rejected a report in Swedish media that it may be inflating sales by booking revenue before some clients are invoiced.

As usual, that’s the proximate cause, but the deep structure is that 4G tech has been rolled out worldwide already, and no one’s buying much these days.

With much of the so-called fourth-generation networks already built in the U.S. and China, Vestberg had vowed to improve profitability, but the stock has declined since reaching a more than seven-year high in April last year.
Vestberg had carved out new business units targeting media and enterprise customers to get back to growth, while investing in a next generation of so-called 5G wireless technology, which represents the next wave of spending at Ericsson’s telecom carrier customers. However, he refrained from big, dramatic moves like Nokia’s purchase of Alcatel-Lucent SA, opting instead for a partnership with Cisco Systems Inc. for Internet products like routers.

So, he’s out for thinking small bore, and we’re seeing the hiccups from the 4G/5G transition in Phoneland.
Second story: Steven Russolillo says that Apple is ripe for a Rally, despite the fact that market watchers are negative on the giant:

Much of the bearish thesis is due to weakening iPhone sales, which account for more than half of revenue. The iPad isn’t selling as well as it used to and the jury is out on the Apple Watch. Tech investors are allergic to anemic growth, which explains why the tech-heavy Nasdaq has lagged behind the Dow industrials and S&P 500.
Still, Apple has been punished more than enough. The iPhone slump appears priced in. And while the next iPhone, expected later this year, likely won’t be a significant upgrade, there is optimism that sales growth will soon bounce back. Analysts forecast iPhone unit sales will rise 5% for fiscal 2017, which ends next September.

The real question is not about stock price (or profits, either, with $10.52 billion in the March quarter), but about consumer buying behavior. Will we have to wait for a new mobile device — like AR/VR goggles? — before there is another huge surge in consumer demand for mobile? Watches aren’t the future, but goggles will be, I bet. Not a 2016 trend, though. Maybe 2017?
The third and last data point for today: Aaron Pressman digs into AT&T’s efforts to convince Wall Street its wireless business is healthy. His argument reviews the standard argument that postpaid subscribers — the ones signed up for monthly accounts — are generally considered to be better sources of reliable revenue than prepaid subscribers, who generally ‘spend less for service, buy cheaper phones, and tend to defect to other carriers more frequently’.

The bottom line is that so far this year, AT&T’s postpaid subscribers grew only 1% while prepaid subscriptions increased 21%. That’s disturbing to Wall Street, based on the ruling assumption that postpaid customers are preferable.
Thus, Stephens has been trying to push some new math on the analysts. In essence, his argument is that the best customers in prepaid are actually a lot better—and more profitable—than the worst customers in postpaid.
The average service revenue AT&T collected from postpaid customers who have left—and who mostly had not upgraded to smartphones yet—was only $35, he said during a conference call with analysts on Thursday afternoon. But the new prepaid customers signing up with Cricket are bringing in “closer to a $41, $42” of average revenue. Additionally, it costs less to acquire a new prepaid customer and less to provide them with customer service, he noted.
“So from that standpoint, the economics are better, and it is being shown in our margins,” Stephens told analysts, pointing out that while total wireless revenue was down slightly, profit margins were at record highs.

So AT&T has landed in a different dimension, where the economics are reversed, with T-Mobile and others screwing up the numbers for postpaid, while the supposedly poor prepaid sector looks good. However, this may be only true for a short transient period.
And the back office transitions around cable and internet, suggest other churn as the world is turning:

The telco is shedding expensive-to-maintain cable TV customers at its U-Verse unit while adding less costly satellite TV customers for DirecTV. AT&T is dropping broadband Internet customers who connect via older DSL lines while trying to add fiber optic broadband customers. And it’s trying to move corporate customers from traditional managed networks to cheaper virtualized networks. If all of the transitions succeed, both revenue and profits should grow.

Putting all the dots together? The consolidation in Phoneland is accelerating. Old technology is maturing, while new technologies and business models are only slowly emerging, which is leading to the downdraft at Ericsson, and financial analyst disdain for Apple and AT&T. The slowing rate of purchasing — by telcos and consumers, both — is leading to consolidation, the classic market maturation that comes right before a new era of breakthroughs and growth. But those breakthroughs won’t be in 2016.

AT&T beats T-Mobile in latest J.D. Power network quality rankings

J.D. Power released a report on Thursday looking at which of the big four major U.S. carriers provide cellular service with the fewest lost calls, slow downloads, failed texts and other common issues.

As usual, the survey says Verizon has the highest mobile network quality. Verizon’s network had the fewest connection problems among the big four carriers in all six geographical regions that J.D. Power looks at. AT&T came in second place, taking the runner-up spot in all six regions.

Last year, T-Mobile started to take the second-place slot from AT&T in areas such as the Northeast and West. This year, though, AT&T reclaimed it in those regions. One way to explain that: Last summer, when the previous report came out, T-Mobile had been in the process of building a massive network expansion. However, T-Mobile’s been adding millions of subscribers since then, and the reduced network quality could be because its network is starting to show signs of saturation.

JD Power Northeast 2015 Q1

In the northeast region, for instance, Verizon subscribers can expect to see 11 problems per 100 connections; AT&T subscribers will see 13 problems per 100 connections; and T-Mobile lags behind with 16 problems per 100 connections. Last summer’s J.D. Power report suggested that T-Mobile only had 12, and AT&T had 14. Verizon stayed steady with 11 problems per 100 mobile interactions.

In the other five regions, the situation is similar. Verizon even improved its mid-Atlantic performance to take the top spot back from AT&T there. Overall, there have been more issues with network quality in the past six months than before. Out of every 100 network connection, across all four carriers, there is a problem with 13 of them. Last year saw an average of 12 issues per 100 connections.

Network quality isn’t the be-all and end-all for carriers, though. J.D. Power administers surveys looking at customer service as well, and T-Mobile came out on top of that last summer.

Charts for all six regions are available from J.D. Power.

Ting makes it easier to connect an unlocked phone on the cheap

If you’ve got an unlocked T-Mobile or AT&T smartphone and need cheap cellular service for it, mobile virtual network operator Ting is now accepting your business.

Ting announced that its GSM network service is now in “open beta,” which means customers don’t need a invite to sign up. GSM support means that Ting is far more likely to support the devices consumers already have or want. The $9 Ting GSM SIM card allows Ting to work with most devices sold in the United States — not just with devices originally sold for GSM carriers AT&T and T-Mobile, but also many of the LTE smartphones from Verizon and Sprint that support T-Mobile frequencies.

You simply have to make sure the device you want to bring to Ting is unlocked. Here’s a quick guide to making that happen. If you don’t have an old device, or don’t want to buy one from a third-party retailer like Amazon or Best Buy, Ting sells new phones, including the iPhone 6.

Previously, Ting used Sprint’s networks exclusively, which restricted users to old Sprint devices. For its GSM network, Ting is buying capacity from T-Mobile, as Gigaom reported earlier this month. Ting is keeping its CDMA network around and users will be able to tap into speedy LTE data on both networks — although not on the same device at the same time. CDMA and GSM devices can share a single Ting account.

Ting is an interesting and inexpensive carrier even among MVNOs. Its pay-for-what-you-use plans don’t bundle services like data and minutes. So if you find yourself using lots of text messages but you’re always on Wi-Fi, or are a data fiend but never text, Ting could save you money by only charging for what you use.

Ting warns that its service on GSM networks is “not quite perfect yet.” It doesn’t support international roaming or international dialing, for instance, but since your device has to be unlocked if it’s on Ting, when you travel you can simply slip a local SIM card in. If you’re interested in trying Ting out, first take a look at its tool that checks if your device will work on its networks.

Sprint entices T-Mobile switchers with up to $550 in credit

In December, Sprint rolled out a promotion called “Cut Your Bill In Half” meant to attract AT&T and Verizon customers by offering them bill credits. Sprint extended the program to T-Mobile subscribers on Friday. Here’s how it works: Any T-Mobile subscriber can receive credit — at least $200 — for trading in a working and activated T-Mobile smartphone, in addition to a contract buy-out credit worth up to $350 per line. The credit comes in the form of a prepaid Visa card and the deal runs through April 9. These kind of promotions are one big reason that Sprint is once again adding postpaid subcribers.

New T-Mobile prepaid unlimited talk and text plans start at $40

T-Mobile announced on Thursday that it’s introducing a new class of prepaid plans called Simply Prepaid. It’s a monthly plan that includes unlimited minutes, texts, and 3G data — you simply pay for how much 4G LTE data you expect to use.

There are three Simply Prepaid tiers, starting at $40 per month, which nets you 1GB of LTE data, all the way up to $60 per month, which comes with 5GB of 4G LTE data. Once you’ve used up your LTE allotment, you’ll be throttled to 3G speeds until the end of the month.

While Simply Prepaid customers can tap into some T-Mobile bells and whistles like Wi-Fi calling,  these plans don’t include T-Mobile’s data exception for music streaming or cheap international data options that come with T-Mobile’s postpaid Simple Choice plan.

Simply Prepaid joins T-Mobile’s Pay As You Go prepaid plan, which starts at a much less expensive $10 but has metered minutes and texts, and users have to buy expensive one-day or seven-day data passes. Simply Prepaid plans will become available through [company]T-Mobile[/company] and authorized dealers on January 25.

T-Mobile will pay $90M over bogus charges on customer bills

The FCC on Friday announced a $90 million settlement with T-Mobile, making it the latest phone carrier to pay a penalty for “cramming,” which involves adding unauthorized charges to customers’ bills for subscriptions or “premium” text message services.

Under the terms of the settlement, T-Mobile will pay at least $67.5 million to fund a program for consumer refunds, plus another $18 million to state governments and $4.5 million to the U.S. Treasury.

“Yet again we are faced with a phone company that profited while its customers were fleeced by third parties who placed unauthorized charges on their phone bills,” said Travis LeBlanc, Chief of the FCC’s Enforcement Bureau.  “And once again the FCC is standing up for those customers.  Today’s settlement holds T-Mobile responsible for its billing practices and puts money directly back into the pockets of American consumers.”

The FCC’s press release says current and former T-Mobile customers can apply for refunds at www.tmobilerefund.com, though the website doesn’t appear to be working yet. Once it is up and running, it is likely to mirror a similar site where consumers who were bilked by AT&T over cramming can fill out a claim.

The T-Mobile news comes day after news that Sprint reached a similar cramming settlement with the U.S. Consumer Financial Protection Bureau.

In all the cramming cases, consumers were typically charged $9.99 from third parties such as astrologers or celebrity news sites, often without their consent. According to the FCC, the phone carriers, which earned a cut of the proceeds, effectively looked the other way and continued imposing the charges even though they should have known they were not legitimate.

T-Mobile adds 14 music apps that don’t count against data caps

On Monday, T-Mobile added several new music apps to its list of Music Freedom services, including Google Play Music and SoundCloud. The program allows users to stream music from various services without data usage counting against subscribers’ monthly data allotments.

HTC’s Windows Phone now available from AT&T and T-Mobile, too

If you’re loyal to Windows Phone and looking for a new device this holiday season, there aren’t many high-end options to choose from. One of the best is HTC’s One M8 for Windows, which has the same body and build-quality as its Android sibling, but running Microsoft’s mobile operating system instead. It was only available from Verizon to start, but now other big carriers are carrying it as well. Prices vary. Verizon sells it for $99 with a contract, but AT&T, for instance, is charging $199 with a 2-year commitment.